emergencemarketing.com

In reading the book The Happiness Hypothesis by Jonathan Heidt I came across an important element that makes ultrasocial societies work - reciprocity.

Heidt defines ultrasociality as: living in large cooperative societies in which hundreds of thousand of individuals reap the benefits of an extensive division of labor. Only four instances of ultrasociality are in existence - among hymenoptera (ants, bees and wasps), termites, naked mole rats, and humans. In all species but humans the force that makes that possible is the genetics of kin altruism. In an ants nest or a bee nest, everybody is brother and sister, and since you have as much genes in common with your siblings as you have with your children, the evolutionary drive to leave surviving copies of your genes makes those ultrasocial communities work - shared genes equals shared interest.

In societies that are not structured like bee or ant colonies, the shared set of genes that you have with others drops off rather dramatically - while you share 50% of the genes with your children and siblings, you only share 1/8 the genes with your cousins, and 1/32 with second cousins. In a strictly Darwinian calculation, you would only spend as much energy to save 4 of your cousins as you would for 1 child or brother. That is why kin altruism explains only how groups of a few dozen, or perhaps a hundred, animals can work together. The rest would be competitors in the Darwinian sense.

So what happened to human societies? How did we get fictitious families, like the Mafia, where there is no real kinship, even though they talk about the Godfather and being part of the “family”, to work as ultrasocial societies? It’s the old fashioned “you scratch my back and I’ll scratch yours” phenomenon - which is in fact a mindless and automatic reciprocity reflex. if someone receives a favor, that person will be driven to repay that favor - not because it the proper thing to do - but because it is a built-in ethological reflex. It’s tit-for-tat, hardwired in our brains, that opens the possibility of forming cooperative relationships with strangers. Now mind you that tit-for-tat can only explain the existence of social groups up to a few hundreds. What allows larger social groups is its co-existence with vengeance, gratitude and gossip as tools that reduce the payoff to cheaters by the cost of making enemies.

Those very primitive hardwired human behaviors confirm a lot about what makes online communities work as well - the importance of reputation, the importance of self-organized posses to police communities, the importance of helping one another as a currency, and the failure of communities where reciprocity is not an integral component of the community.

That is the question that MIT professor in behavioral economics Dan Ariely tries to make his readers think about in his new book, Predictably Irrational: The Hidden Forces That Shape Our Decisions, as he proves that most people are indeed predictably irrational.

Take the following experiment as an example. In the experiment, students were introduced to six products - two different wine bottles, a trackball, a wireless keyboard and mouse, a design book and a box of Belgian chocolates. Students were then given a form that listed all the items and asked to write the last two digits of their social security on top of the form and also next to each item in the form of a price. So, if someone’s last two digits was 23, they were asked to put $23 next to each item on the form. Next they were asked whether they would pay that price for that item with a simple yes or no. When the students finished that, they were asked how much they would be willing to bid for each item. Well guess what? The students with the highest-ending social security digits (from 80-99) bid highest, while those with the lowest-ending numbers (0-20) bid lowest. In the case of the cordless keyboard, the top 20 percent bid an average of $56, while the bottom 20% were willing to pay an average of $16. Overall the top 20% were willing to pay prices that were 216 to 346 percent higher than those of the students with social security numbers ending in the lowest 20%.

And that is just one of the many examples given in Prof. Ariely’s book.

So what does this all mean? As an economist, Ariely believes that fundamental economic principles like the one where supply and demand determine pricing, or the claim that free markets and free trade benefit everyone involved in those transactions, may in fact be bogus. The first one is based on the assumption that the supply and demand forces are independent from one another. The second is based on the assumption that all players in the market know the value of what they have and the value of the things they are considering getting from the trade. But if our choices are affected by random initial anchor prices as demonstrated in the experiment above as well as other experiments listed in the book, then the price that I am willing to pay (demand) can be heavily influenced by the supply side through MRSP (manufacturers suggested retail price), promotions, discounts, etc. So it is not the consumers’ willingness to pay that influences the market price, but instead the market prices themselves that influence the consumers’ willingness to pay. And for the same reason, the choices and trades we make in free markets may not at all reflect the true benefit that we would derive from the things we trade.

So what does that mean from a marketing perspective? For starters, and as it relates to pricing, it means that marketers may in fact have more control over buying behavior than they are currently given credit for. Additional research described in the book as well as on Ariely’s web site and blog, indicates that marketers may in fact be able to influence much more than the price a consumer is willing to pay for something, but also influence their general buying preferences.

In the end, the consumer may not be as much in charge as you think…

You cannot predict consumer purchasing by looking at buying behavior from an economist point of view. Their way of abstracting the buying behavior as that of a rational individual driven primarily by personal needs, instead of looking at it from the complex social web perspective in which we actually make buying decisions, is just not realistic. As with many complex systems, you cannot understand, nor predict, a large social group’s buying behavior by abstracting the individual members of that group and studying their individual buying behavior as if they were rational players who are not influenced by their environment and the behaviors of others.

An interesting book covering this topic, which happened to be my first Kindle purchase, is : The World of Goods: Towards an Anthropology of Consumption. Authored by Mary Douglas and Aron Isherwood - it nicely contrasts the anthropological way of looking at consumption with the economic view.

A good example is to imagine what a small island might look like if it were promoted as a luxury retreat. What kind of stores would you expect, what kind of display/status purchases would people make, etc. Now imagine that same island, with the same people, after a natural disaster, or as they are all getting older, and now influenced by a deep religious movement. The whole island would look differently, people would buy differently, the type of stores that would be there would be different, etc. That is not something you would be able to predict based on the individuals.

Communities impose constraints on the individual members of that community. In some communities it is not ok to buy certain things - think buying fur coats in green communities. In other communities, people will buy stuff to exclude others from their community - think high roller communities who will make you feel bad if you don’t have your own jet, or a biker community if you do not have all the appropriate paraphernalia.

As the authors of the book suggest - “the collapse of a community frees individuals, and thereby affect inflation, spending and saving.”

Now isn’t this exactly what just happened with the mortgage market meltdown? In the past you would have bought your mortgage from a local banker, or a community member you knew. Part of the buying behavior would have been influenced by the community, which would make sure that you did not buy more than you could afford. And if you did, or hit hard times, you would have worked really hard to repay the loan one way or the other. Now, with no community to guide this process, many people bought stuff they could not afford, and many are walking away from their situation with hardship, but without the guilt feelings that they would have had in their community in the past.

Another interesting assumption from the book - which I barely started reading - is that “there is a comprehensive, fundamental set of human wants which concerns control of other humans (and also escape from being controlled).” Now this explains way more than political buying decisions.

Very insightful…

I have been remiss at writing about a few good books I read in the past few months. My reading list is also desperately out of date…

One book which definitely should interest any marketing practitioner is a book by my good friend Lois Kelly, who also blogs on the Foghound blog.

The book - called Beyond Buzz, The Next Generation of Word-of-Mouth Marketing - is a great “how to” book with a ton of actionable ideas. The author does a great job clarifying the distinction between making meaning and making buzz. She also teaches you how to uncover interesting things about your company or product and turn them into “point of views” that people will want to talk to you about, she tells you how to organize customer listening tours, and much more. The book also provides some great frameworks and questionnaires to help you turn word-of-mouth strategies into actionable plans that will work, and not fizzle out or backfire, as many of them do.

Definitely a great book to have on your office bookshelf.

[Tags: marketing wom word of mouth marketing beyond buzz word of mouth lois kelly]

There is a new 5 “things” meme going around and I have just been tagged for it by Mary Schmidt. This time the idea is “thin-slice” a particular topic - a term coined by Malcolm Gladwell in his latest book Blink, and described as follows:

“Thin-slicing is a neat cognitive trick that involves taking a narrow slice of data, just what you can capture in the blink of an eye, and letting your intuition do the work for you.”

My task was to thin-slice a marketing plan - so here we go:

1) Do you really need a marketing “plan”?
Very often people just need to get out and engage with customers, prospects, influencers and connectors. There is no need for a marketing plan to do that. Often times marketing plans are just produced by marketing luddites as a CYA document. Granted, for some very large projects that involve large teams of people a plan can be useful - but more as a check-list than as a marketing roadmap.

2) Does the marketing plan show the addressable market being in the billions of dollars?
Any VC will scoff at these numbers - yet they won’t invest if it is not true. Don’t talk about the total addressable market, tell me how you will get your next 10 or 100 customers. Who are they, what do they do, where do they live, how will you reach them? Give me real life scenarios of potential customers and how you will help them solve their problem. Don’t give aggregate figures that have zero meaning.

3) Are you pretending or intending on being a leader in a category that nobody ever heard of?
Most companies I have worked with consider themselves the category leader in a category with one player - themselves. A category is recognized by others as a category and has other players in it. You can “create” a category, but you need help to create a new one - including help from competitors. Show me how you will create a new category, and who you will enlist to help with the creation? Show me how you will change the rules of the game in that category, how you will change the players or change their respective value as you enter the category - now that’s interesting!

4) Does your competitive review result in your company or product being in the upper right hand corner of some diagram?
Do I need to elaborate? You and everybody else lives there…it must be pretty tough to compete there. Show me where you are on the BS curve compared to others - that would be much more interesting…

5) What part of the plan deals with how you will deal with change?
The biggest danger with plans is that they become “bibles” - and once they are approved nobody can deviate from the chosen path. Yet most successful marketing programs are emergent in nature, they are like a jamming sessions…and so back to point 1) do you really need a marketing plan?

And now my turn to tag:

• Tara - how about engaging communities as part of your marketing plan?
• Pito - what about product plans?
• Jackie - how about word of mouth marketing plans?
• Chris - what about customer service strategies?
• Tom - what about brand strategies?
• [updated] I decided to add a 6th one as I care about PR and Europeans - Neville, what do you think?

[Tags: thin-slicing thin-slice marketing plan blink]

Here are two interesting and very unexpected things that I ran across this weekend…

First from the New England Journal of Medicine review of Love on the Rocks: Men, Women, and Alcohol in Post-World War II America on Amazon:

Alcohol has always had a special role in the United States. From 1620, when the Puritans were forced to land on Plymouth Rock because the Mayflower had almost run out of beer
(via Rageboy email)

Then next from Richard Dawkins’ new book - The GOD Delusion:

The Penguin English Dictionary defines a delusion as a ‘false belief or impression’. Surprisingly, the illustrative quotation the dictionary gives is from Philip E. Johnson (the leader of the creationist charge against Darwinism in the US): ‘Darwinism is the story of humanity’s liberation from the delusion that its destiny is controlled by a power higher than itself.’
(italic text was added by me)

Hilarious! The puritans running out of beer and the creationists calling a higher power a delusion!!!

Right on the heels of finishing Michael Crichton’s last book, NEXT - which deals with the future of genetic research - I read an article in Utne describing how a California company has developed a Hypoallergenic cat. You got it right - for $3,950 you can buy a genetically modified cat that does not produce the glycoprotein responsible for itchy eyes, sneezing, and hives. Note that for that price they will not guarantee that the cat will lead a healthy life.

Yikes…what’s next after that? Genetically engineered sharpshooters, genetically designed actors, genetically enhanced football players? How about genetically designed preachers? No that’s not going to work, those guys already think that they are the end of evolution…

Thankfully there are also good applications of genetic research such as this clinic that treats Anhedonia:

Or this one - where a company has preserved the gene for blondes - which are expected to become extinct in the next 200 years.

[Tags: genetic research genetic engineering genetic design genetic]

I read Bill Maher’s latest book this weekend - New Rules, Polite Musings From a Timid Observer - which was great.

Here is an interesting new rules:

God is a waffler. Pat Robertson said God told him that Iraq would be a bloody disaster. But the same God told Bush it wouldn’t, which so surprised Robertson, he almost dropped the pennies he was stealing off a dead’s woman’s eyes. But why is God talking out of two sides of his mouth? Flip-flop. God told us to beat our swords into plowshares. God: Wrong on defense, wrong for America.

And here is another:

Ass-kissing must be done in person. Yes, I’ll “continue to hold” but not because you said, “Your call is important to us.” If my call was really important to you, you’d hire a human to pick up the damn phone.

As I am working through my (huge) pile of books to read I hit another good one last night. It is “The birth of the Chaordic Age” by Dee Hock. Not exactly a new one, but I never claimed this site to be a news site or a recent book review site…

As many of you know, Dee Hock was the founder of VISA - one of the largest companies in the world. The interesting part about VISA is that it is one of the few large-scale commercial entities where the organizational infrastructure is not based on a command and control hierarchy, but rather on a true emergent self-organizing infrastructure. When Hock realized that none of the traditional company models could handle such a massively complex and distributed business model he focused instead on building a DNA for the new company, based on purpose and principles, rather than building a command and control infrastructure with all of its associated rules and regulations. The results - a huge company that emerged from chaos in less than 2 decades to become one of the most successful self-organizing companies in the world.

It is interesting to see what questions drove him throughout his career and ultimately led to the creation of VISA:

• Why are institutions everywhere, whether political, commercial, or social, increasingly unable to manage their affairs?
• Why are individuals, everywhere, increasingly in conflict with and alienated from the institutions of which they are part?
• Why are society and the biosphere increasingly in disarray?

It’s also interesting to read him say that: “…the need to harbor the Four Beasts that inevitably devour their keeper, Ego, Envy, Avarice and Ambition, and of a great bargain, trading Ego for humility, Envy for equanimity, Avarice for time, and Ambition for liberty…”

Maybe that is the way to ensure that marketing is not just another department (or worse - a set of departments) in a company - but rather a way of doing business, a way to behave in the marketplace. Instead of creating organizational structures with hierarchies, goals, rules and regulations we could focus instead on developing marketing DNA that can spread throughout the whole organization and become part of the company’s fabric. On a certain level, Ritz was able to do that with their “every employee can spend up to $2,000 to fix any customer problem” principle. That’s not a rule which gets enforced, and it’s not a goal that gets measured (other than maybe to track potential abuse) - it’s really a “behavioral” DNA strand that gets injected throughout the company. We could expand on that and come up with “listening” DNA strands, “innovation” DNA strands, or “branding” DNA strands.

Heck - why stop with marketing? Why not “financial” DNA strands, or a “governance” DNA strands?

[Technorati Tags: organizational structure hr marketing employee behavior]

I have always been a big fan of Kurt Vonnegut, one of the grandmasters of American letters, and I too am glad that he broke his promise and wrote one more book - A Man Without A Country (that’s how I feel sometimes - as do many expats).

I know I would not do it justice if I were to try to summarize/review what is in this collection of mini-memoirs - but I wanted to quote a few passages to give you a taste of what to expect:

“But I am now eighty-two. Thanks a lot, you dirty rats. The last thing I ever wanted was to be alive when the three most powerful people on the whole planet would be named Bush, Dick and Colon.”

Or when he writes:

” I apologize to all of you who are the same age as my grandchildren…They like you, are being royally shafted and lied to by our Baby Boomer corporations and government.”

…and this:

“Albert Einstein and Mark Twain gave up on the human race at the end of their lives…Like my distinct betters Einstein and Twain, I now give up on people too…”

Not all is dark in this most recent book - every now and again you can still see signs of the all too typical Vonnegut humor.

[Technorati Tags: kurt vonnegut]